Essential Residential: What is the latest on Renters’ Rights and Leasehold Reform?

In the last week there have been two significant developments for investors and stakeholders in residential property.  The first relates to leasehold reform and the second impacts the private rented sector. We have been tracking developments on our Essential Residential Hub and timelines: Evolution of the private rented sector and Changing landscapes in residential leasehold.

The Renters’ Rights Bill received Royal Assent on 27 October 2025

Whilst the Act has now hit the statute book, the majority of its provisions require commencing legislation. The Act came into force on 27 October for the purposes of making regulations which underpin substantial parts of the Act.

The following provisions will come into force on 27 December 2025, being 2 months after the Act received Royal Assent:

• Provisions concerning tenancies which cannot be assured tenancies (i.e. tenancies of more than 7 years but less than 21 years granted before the Act was passed and fixed term tenancies of more than 21 years and certain types of tenancies to students (Please see our Quick Read: Renters' Rights and Student Accommodation: What is the latest as the Act obtains Royal Assent?); and
• Additional investigatory powers of enforcement to be given to local authorities

The remaining provisions of the Act will require activation by secondary legislation containing details of the Commencement Date.

In terms of timing, during the final debate in the House of Commons on 22 October 2025, Matthew Pennycook, Minister for Housing, said that the Government wants there to be a smooth transition to implementation and enough time for the sector to prepare. The Government issued a press release on 27 October confirming that minsters will outline how the reforms will be rolled out in the coming weeks.

The Act provides that existing Assured Shorthold Tenancies will be converted into Assured Periodic Tenancies on the Commencement Date. New tenancies created after that date will automatically be Assured Periodic Tenancies.

Key transitional provisions to note are:

1. If possession proceedings have not been started before the Commencement Date based on an existing Section 8 or Section 21 Notice, these can still be begun provided that they are issued within 6 months of service of the relevant notice (withing 12 months for a Section 8 Notice) or 3 months from the Commencement Date, if the 3 month period ends before the 6 month period. There is therefore a 3 month long stop date following the Commencement Date.

2. If proceedings for an order for possession have been commenced immediately before the Commencement Date, the relevant Section 21 Notice or Section 8 Notice remains valid and the proceedings can be continued until their conclusion.

   All eyes are now on the Government and an announcement as to the Commencement Date of the Renters’ Rights Act.

Judicial Review against provisions of the Leasehold and Freehold Reform Act 2024 unsuccessful

On 24 October 2025, judgment was published in the Judicial Review proceedings brought by various landlords arguing that certain leasehold reforms within the Leasehold and Freehold Reform Act 2024 (“LAFRA 2024”) infringed their rights to protection of their property under the European Convention of Human Rights. In very broad terms, the Court found that in relation to each measure challenged, the decision reached by the Government was within the margin of appreciation which it was within its discretion to adopt.

The landlords had challenged:

1. the cap on ground rents in the enfranchisement premium calculation at 0.1% of the freehold vacant possession value;
2. the marriage value reform which will substantially reduce the premiums receivable by landlords for lease extensions and enfranchisement where the unexpired term of a lease is below 80 years; and
3. the reforms to costs recovery which mean a landlord cannot recover its non-litigation costs from tenants who seek to exercise statutory rights to enfranchise. 

In all cases, the Court placed substantial emphasis on the fact that a lease is a wasting asset and the reforms did not place an onerous burden on landlords, but represented fairness as a tenant would need to enfranchise at some point to avoid losing their asset completely.

One charitable landlord also sought to carve out an exemption to the marriage value reforms on the basis that it was established for charitable purposes and this reform may damage its charitable aims. However, the Court concluded that the reforms under LAFRA 2024 provided fair compensation to landlords which was not altered by the profile of any particular freehold portfolio.

Reports suggest that this may not be the end of the story as all or some of the landlords could decide to appeal the decision but there is no publicly available information on this at present and no doubt the various landlords will be considering their respective positions.